Memo From National Association Of Tax Professionals
To : Patricia Rumschlag EA
From: National Association of Tax Professionals
Subject: 2013 tax provisions have been signed by the President and are extended for 2014.
Following are the more notable extensions for individuals and businesses. Absent future
Congressional action, each of these provisions expire after December 31, 2014.
• $250 above the line deduction for educator expenses.
• State and local sale tax deduction.
• $4,000 above the line deduction for qualified tuition and fees for higher education.
• Mortgage insurance premium deduction.
• Charitable distributions from an IRA by individuals age 70½ and older.
• $2 million cancelled mortgage debt exclusion.
• $250/month exclusion for transit benefits.
• Contributions of real property for conservation purposes.
• Nonbusiness residential energy property credit.
• $500,000 §179 expense deduction; $2 million investment cap.
• §179 expensing election may be revoked without IRS consent.
• $250,000 expense deduction for qualified leasehold, retail improvements and restaurant
• 50% bonus depreciation on new property, $8,000 cap on vehicles for a total of $11,160 ($11,460
for trucks and vans).
• Research credit (20% for qualified research expenses or 14% alternative simplified credit).
• Work Opportunity credit (40% up to $6,000).
• 100% exclusion for gain on qualified small business stock.
• 5-year recognition period for S corporation built in gains tax.
• Classification of certain race horses as 3-year property.
• 7-year recovery period for motorsports entertainment facilities.
• Enhanced deduction for charitable contributions of food inventory.
• New markets tax credit.
• Accelerated depreciation for business property located on an Indian reservation.
• Basis adjustment to stock of S corporations making charitable contributions of property.
• Empowerment zone tax incentives.
• Employer wage credit for employees who are active duty military.
2014 Client Tax Year End Correspondence
December 16, 2014
Please find enclosed the usual items to review for the upcoming year end. We would like to make you aware of a few items that may interest you.
A form that you need to be aware of for this year is form 1095-A. This will be received by individuals who have purchased health insurance coverage through the marketplace exchange. If you have purchased health insurance from the marketplace, please be aware that we will need this form to prepare your return.
Even if you didn’t buy your insurance from the marketplace, you have not been left out. You will need to provide information about your coverage as well. Please keep your eyes open for information regarding your 2014 coverage and bring in with the rest of your information.
Another portion of the Affordable Care Act that we feel may affect several of you is the Net Investment Tax. In general, net investment income includes, but is not limited to: interest, dividends, capital gains, rental and royalty income, and non-qualified annuities, over certain thresholds at a rate of 3.8%.
There is also the 0.9 % Additional Medicare Tax that applies to individuals’ wages, compensation, and self-employment income over certain thresholds, but it does not apply to income items included in Net Investment Income.
There are a few exceptions, of course, to these amounts and we will be happy to discuss these with you at your convenience, should you care to know more.
An item that will affect individuals with business income is changes to Treasury Regulation 1.162 and 1.263(a). The main changes are more guidelines as to what should be classified as a repair and what should be classified as a capital improvement. Please be aware it is important for you to have in writing the dollar amounts you consider acceptable for these categories. This can be a confusing topic, please feel free to contact us to discuss your specific situation.
This year is another year of many changes. Please know, we spend many hours to arm ourselves with as much knowledge as possible to give you helpful information. We continue to strive to help your profits grow and your tax liability stay as low as legally possible.
We look forward to seeing you shortly.